Mortgage defaults in San Diego keep dipping

Mortgage defaults in San Diego County continued to dip in November, helping the local market maintain a more than six-year low and keeping at bay the theory of another foreclosure surge, figures say. Foreclosures also fell last month.

The county racked up 819 notices of default last month, an almost 15 percent drop from October and a 50 percent drop from the same month a year ago, says a Tuesday report from local real estate tracker DataQuick.

Notices of default mark the first official step in the foreclosure process but not all of such cases necessarily result in foreclosures. Homeowners can avert foreclosure through a number of means, including getting a loan modification or completing a short sale, a deal in which they sell their homes for less than what they owe as long as the lender gives an OK.

November's default tally is the lowest for the county since August 2006, when 794 defaults were recorded. They peaked at 3,832 in March 2009.

Real estate experts during the past year have pointed to the steady rise of short sales as a significant factor in explaining why housing distress numbers have fallen and continue to fall. A national mortgage deal between 49 states and five big banks has pushed lenders to complete more short sales in an effort to help overextended borrowers and fulfill the terms of the historic settlement.

In all, nearly 40,000 short sales have been completed in California through the deal, based on an report from Joseph Smith, the watchdog of the mortgage settlement, in November.

The number of San Diego County property owners who have had their homes foreclosed upon also fell in November. They totaled 432, a 13 percent fall from October and a 35 percent fall from a year ago. They peaked at 2,004 in July 2008.

"The two things that stood out on the foreclosure front this year is the big switch toward short sales nationally from foreclosures and the improving economy and housing market," said DataQuick analyst Andrew LePage. "It's allowed prices to stabilize...so that results in fewer people getting into trouble in the first place."

While drops in completed foreclosures might bode well for owners, it has put a damper on homebuying because housing inventory in the county has been significantly curtailed. There were about 4,700 active home listings in late November, a 43 percent drop from November 2009, the year when foreclosures peaked.

Foreclosures that have been resold in the local market, which tend to be more discounted than traditional, non-distressed homes, now make up close to 14 percent of the total homebuying market, DataQuick numbers show. They once made up 55 percent of the market, a peak, in January 2009.

It appears housing distress is trending downward nationwide.

Irvine-based real estate data firm RealtyTrac recently reported that foreclosure filings numbered 180,817 across the nation in November. That's a 3 percent decrease from October and a 19 percent decrease from a year ago. The company's definition of foreclosure filings includes notices of default, scheduled foreclosure auctions and completed foreclosures, its report says.

"The drop in overall foreclosure activity in November was caused largely by a 71-month low in foreclosure starts for the month, more evidence that we are past the worst of the foreclosure problem brought about by the housing bubble bursting six years ago," said RealtyTrac Vice President Daren Blomquist in a statement.

"But foreclosures are continuing to hobble the U.S. housing market as lenders finally seize properties that started the process a year or two ago — and much longer in some cases," he added. "We’re likely not completely out of the woods when it comes to foreclosure starts, either, as lenders are still adjusting to new foreclosure ground rules set forth in the National Mortgage Settlement along with various state laws and court rulings."

Still, California has one of the highest home-distress rates in the country. One out of every 430 homes in the state had a foreclosure filing in November, ranking it fourth. Florida took the top spot; one in every 304 home has a foreclosure filing.